Global Trade and Environmental Effects of EU Biofuels Policies

Are policies to encourage biofuels part of the solution to global warming? Or do their environmental costs outweigh their benefits? On Tuesday, January 13, 2009, CGD hosted IFPRI senior research fellow Antoine Bouet, along with discussant Timothy D. Searchinger of Princeton University and the German Marshall Fund to discuss these questions. Kimberly Elliott, Senior Fellow, Center for Global Development, moderated the session.

Bouet uses a global trade model to examine the impact of trade, subsidy, and mandate policies that the European Union uses or could adopt to promote biofuels. He finds that these policies result in significant changes in land use in the EU and Brazil, mainly increased planting of such biofuel crops as oilseeds, sugar cane and sugar beets. The direct effects of biofuels policies in terms of reduced CO2 emissions are usually positive but the indirect effects, such as those from land use change, are negative. Moreover, the indirect effects are larger.